Racing could pay heavy price in gambling reform

Greg Wood.

Affordability checks will hit revenues but there is a world of difference between online slot machines and sports betting.

A couple of hours after the government’s White Paper on gambling reform was finally published last week, Julie Harrington, the British Horseracing Authority’s chief executive, was asked whether the proposed legislation took into account the fundamental difference between betting – on racing and other sports – and gaming, on fixed-margin casino products.

“There is some good language in there, accepting that there is a difference between sport and evidence of faster losses on those casino-based games,” Harrington said. “I think on a more detailed reading, you’ll see that it may not be the headlines, but the language below really does differentiate that, so it’s clear that that has landed.”

As anyone who has flown with a budget airline may confirm, however, “landed” can feel like a relative concept when there is still a 30-minute yomp to passport control to come. And whatever “the language below” might suggest, the simple fact remains that when it comes to the proposed introduction of “affordability” checks for punters – a potentially significant threat to racing’s funding from betting – there is no differentiation at all.

Initial “frictionless” checks on punters’ finances will be triggered by a net loss of £125 over a month, or £500 in a year. Potentially more intrusive checks will be made if a customer shows signs of “binge” gambling, defined as a net loss of £1,000 in 24 hours, with further consultation on an additional trigger of a £2,000 net loss in 90 days.

As things stand, these thresholds apply regardless of whether a punter gambles solely on sport, solely on casino products or a mixture of the two. And while the relative speed of losses on casino games is acknowledged by some of the government’s language in the white paper, the nature of those losses is not.

A customer plays on a slot machine in a casino. Online games are hugely profitable for gambling companies with new legislation now in the offing.

There is a reason why online slot machines and roulette games are addictive by design. The bright colours and graphics, the flashing lights and sounds and above all the lightning speed of play are gaudy wrapping paper around what is, at its heart, a dull, mechanical process of separating gamblers from a percentage of their stake. The margin is fixed, by the same maths that holds the universe together. The more you gamble, the more certain it is that you will end up as a loser, so they want to keep you spinning, semi-hypnotised and several times a minute, for hours on end.

Most racing punters end up as losers too, of course, but the nature and pattern of those losses will often be entirely different. Some punters bet only on major meetings such as Cheltenham, others only on football or perhaps a more low-profile sport where they feel their knowledge gives them an edge.

And even the super-shrewdies who are sharp enough to make their betting pay long term are all but certain to hit a losing streak at some point that triggers an affordability check, never mind that they are probably giving a bit back at York in August when they made five times as much at Cheltenham in March.

The biggest gambling conglomerates have become hooked on the easy profits from gaming in the last 20 years, and fall over themselves to cross-promote gaming products to customers who initially sign up to bet on sport, as if it is just another way of having a punt. They even have the cheek to inform punters whose sports betting is restricted to pennies that they can gamble as much as they please on slots and roulette.

And racing, for the most part, has stood by and allowed it to happen. When £100-a-spin gaming machines in high-street betting shops toxified gambling’s image, industry figures swallowed – and, in some cases, parroted – the lie that thousands of betting shops would close, with disastrous results for racing’s Levy and media rights income, if stakes were cut to £2 a spin. They were, and they didn’t.

On that basis, an estimated loss to racing of between £8m and £14m as a result of affordability checks can perhaps be seen as the price to be paid for failing to stand up for betting and highlight the poisonous effects of gaming.

But that estimated loss could well be an underestimate, and there are already calls from some campaigners for the thresholds that trigger checks to be tightened. That is only ever likely to be a one-way process.

It is also unclear to what extent affordability checks will impact on a punter’s credit rating. If there is a chance that you will be denied a loan or a mortgage because you had a couple of bad days at Cheltenham, it will be a disincentive to open an account in the first place.

This Grand National was an unsettling spectacle for many inside racing’s bubble
The consultation period on the White Paper before legislation is introduced has already started, and these are all points the BHA will presumably seek to raise in the weeks ahead.

But clear blue water between betting and gaming still seems unlikely, in the short to medium term at least. So on that basis, it might also be useful to press for a small fraction of the new £140m Statutory Gambling Levy, which is a very sensible feature of the government’s plans, to be spent on meaningful, definitive research to quantify the relative harmfulness of betting and gaming.

Gambling businesses have the necessary data at their fingertips – they can, after all, identify unprofitable racing punters after just three or four bets – and it should be freely available to any independent researcher who requires it. Then, and only then, we might be able to think about ways to finally purge the toxin of gaming from racing and betting.